COVID-19 has wreaked havoc on the global economy. But it has also caused a respite in global emissions which some have interpreted as the dawn of a new chapter in the fight against climate change. But that new chapter is already taking a turn for the worse.
With a global focus on economic recovery, the private sector is aggressively lobbying against key climate targets that took decades to implement. Car manufacturers are lobbying to prevent the tightening of emissions limits on cars. Airlines want an exemption on jet fuel tax. The plastics industry is opposing bans on certain plastic products. And some EU member states want the European Green Deal cancelled, the continent’s primary force to fight climate change.
Governments looking for ways to sustain economic recovery post-COVID-19 might understandably be receptive to these ideas, but the reality is this approach applies a band aid to the current crisis while sowing the seeds for the next one.
That’s why 68 top German firms demanding economic aid be connected to rolling back climate change is a wise move, one that the global private sector must pay heed to in order to survive present and future crises.
The move comes alongside the Petersberg Climate Dialogue - the first climate summit of the COVID-19 crisis. Its significance should not be understated. Germany is the EU’s most powerful economy and this decision represents companies with a turnover of €1 trillion and that employ over three million people.
The move also signals an emerging paradigm-shift in how businesses should respond to global challenges. Increasingly, private sector leaders are realising this pandemic demands an unprecedented transformation of traditional economics. That’s why our approach must transcend traditional notions of economic recovery aid. We must incentivise an entirely new form of social capitalism that, like the demands of these German corporations, finally acknowledges that safeguarding our planet makes perfect business sense. Without a viable, healthy planet, there is no possibility of viable, healthy business. Post-COVID-19, capitalism can no longer function as a zero-sum game.
Indeed, this was the central message of the Good Capitalism Forum (GCF), a first-of-its-kind global conference launched last year. At the GCF launch, it was predicted that without a repurposing of capitalism towards social good, the world would fail to avert future global crises.
Equally, the forum highlighted the unprecedented opportunity for private companies to harness their immense talent pool, ingenuity, innovation, intellectual property and technical know-how for social good.
Indeed, during the COVID-19 crisis, we have seen glimmers of this potential. Automotive manufacturers switched factories to producing ventilators, Ikea turned parking lots into COVID-19 testing areas, family-run printing firms used 3D printers to produce life-saving masks. Yet, this all points to deeper possibilities. Imagine what could be achieved if such private sector innovation was strategically directed and supported by government aid, and applied beyond the COVID-19 pandemic to tackling climate change? We would make socially beneficial pursuits like climate action profitable.
As the global economy is haemorrhaging, governments should be wary of calls to shore up ailing industrial sectors that have been in decline for decades. They should instead align economic aid to sustainability, to ensure private sector ingenuity is structurally incentivised towards building societal resilience, thus preventing the next crisis.
Critics may argue that social benefit and financial profit are fundamentally at odds and that by doubling-down on climate goals during the worst recession in living memory, these German companies are committing economic suicide. But I beg to differ.
Claims of economic suicide are failing to put planetary interests we all rely on ahead of our narrow self-interest. Without coordination between the private sector and government support to safeguard the global collective interest, it is a matter of time before we experience another global crisis; be it a pandemic, financial or ecological crisis.
With each new crisis, governments will be forced to print more money, issue more bailouts, and become subject to lending to keep afloat. Eventually, there will be no option except to take major ownership stakes in large corporations to maintain vital public services that can no longer delivered profitably. Instead, the world’s economic machinery must redirect its transformational energy beyond profit-making to address the major societal challenges of our time.
It is precisely in finding solutions to the major global challenges of our time that invariably leads to the greatest private sector innovation and market driven solutions to real-world problems. A perfect case study for this argument is the circular economy pioneer, Green Rubber Global. Originally created to address a pressing social problem - the inability to effectively recycle the astronomical amounts of global rubber waste – this company has since developed a ground-breaking method to sustainably dispose of one billion waste tyres a year, leading to revenue generation and a vision for economic growth that would simply have been unfeasible without the impetus to address one of the world’s biggest environmental recycling conundrums.
We now need the private sectors of other nations across the world to echo similar sentiments and principles. Long-term business viability depends on supporting the collective good. How the world re-evaluates the role of capitalism and the private sector in addressing not just climate change but all collective global challenges is the defining issue of our time.
The embracing of social capitalism - the true capitalism - by a world-class German private sector is pointing the way to the only viable future. It’s time for global industry to follow this example.
- Vinod Sekhar is Asia’s first recipient of a Global Green award for his work for global technology developments related to elastomer recycling, deproteinization, HIV and cancer treatment, innovative financial software, biophotonics and biofuels. The World Economic Forum named Vinod as one of its 40 “New Asian Leaders”.
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